## Facts

- Margaret L. Barnette married Wilson M. Barnette in 1967; Wilson owned shares in Van Pack of Arizona, Inc., a moving and storage corporation he operated.
- In March 1970, while hospitalized, Wilson executed a power of attorney allowing Margaret to run the business.
- On March 25, 1970, Wilson executed a written “Declaration of Trust” stating he held his Van Pack shares as trustee for Margaret’s benefit, with distribution to her upon his death, and reserving a power to revoke.
- Wilson did not transfer the shares on the corporate books into a trustee designation and did not endorse the stock certificates.
- Marital difficulties later arose; Wilson consulted attorney James F. McNulty concerning domestic matters and estate planning and stated the business was his separate property and should go to his son.
- Wilson also consulted divorce counsel and stated Margaret would try to take his business interest even though it belonged solely to him; both spouses filed for divorce.
- Wilson directed preparation of a will treating the business as his alone; he died about a week after the divorce filings.
- After Wilson’s death, Margaret produced the Declaration of Trust and claimed the shares were her separate property outside the estate; the executor denied the trust’s effectiveness.
- The trial court entered judgment for the executor; Margaret appealed.

## Issues

1. Whether Wilson created a valid inter vivos trust in his corporate shares by executing the Declaration of Trust.
2. Whether Wilson revoked the trust before his death.
3. Whether the trial court erred by admitting oral testimony regarding Wilson’s statements about ownership and intent.

## Decision

- The Court of Appeals of Arizona affirmed the judgment for the executor.
- The court held the Declaration of Trust was sufficient to create a valid self-declared inter vivos trust in Wilson’s shares despite missing corporate transfer formalities.
- The court held Wilson effectively revoked the trust because the revocation clause did not require an exclusive method, and his later statements and estate-planning actions clearly manifested intent inconsistent with the trust.
- The court held oral testimony about Wilson’s statements to attorneys was properly admitted to prove intent and revocation.

## Legal Principles

- A self-declared trust may be created by a written declaration identifying the trust property, trustee, and beneficiary; a separate conveyance is not required when the settlor declares himself trustee.
- Failure to re-register stock on corporate books or to endorse stock certificates does not defeat creation of a self-declared trust when the declaration otherwise establishes the trust relationship.
- If a trust reserves a power of revocation and lists methods of revocation without making them exclusive, revocation may be accomplished by any act or communication that clearly manifests the settlor’s intent to revoke.
- In determining revocation of a revocable trust, evidence of intent may include oral statements to third parties and later testamentary planning inconsistent with continued trust operation.
- Oral testimony concerning the settlor’s state of mind and intent is admissible to establish revocation when the trust instrument does not require a written revocation.

## Conclusion

The court recognized that Wilson’s written declaration created a valid self-declared trust in his corporate shares, but it concluded he revoked the trust before death through clearly expressed contrary intent and inconsistent estate-planning conduct, and it upheld admission of oral testimony used to prove that revocation.


Barnette v. McNulty, 21 Ariz. App. 127, 516 P.2d 583 (Ct. App. 1973)